Biodiversity credits designed to incentivise the conservation and restoration of natural habitats need better transparency and regulation to be effective and credible.
A new study by scientists from the University of Nottingham's School of Geography has assessed 11 major biodiversity credit suppliers against six integrity criteria defined by the International Advisory Panel on Biodiversity Credits (IAPB). Results show an average score of 2 out of 3, with notable weaknesses in verifiable outcomes, particularly relating to the independence of third-party validation and verification, and transparency in risk disclosure. The results have been published in Proceedings of the Royal Society B.
Biodiversity credits are generated when measures of positive biodiversity outcomes are verified. When these credits have been properly validated and verified, biodiversity credits represent the evidenced addition (or avoided loss) of biodiversity that resulted from a restored (or conserved) site.
Biodiversity credits aim to mobilise conservation finance by quantifying and trading measurable biodiversity gains. However, attempts to model these credits similar to carbon markets with a single unit face major limitations due to biodiversity's multidimensional and context-dependent nature. Over-standardization risks stripping ecological complexity and intrinsic value, while excessive detail can make metrics impractical for market use.
Rather than pursuing a single universal biodiversity metric, the authors advocate focusing on harmonizing data collection and processing protocols across projects. This would allow for flexibility in metrics while ensuring datasets remain comparable, transparent, and usable, minimizing confusion across diverse metrics in different scales and different methodologies. However, such an approach requires transparent governance based on high integrity.
Major international bodies like the International Advisory Panel on Biodiversity Credits (IAPB), the World Economic Forum, and the UNEP-supported Biodiversity Credit Alliance recently set out guidance but the real test is turning those principles into action, and we're not there yet.
Dr Eun Kim, lead author of this study said: "Given that the biodiversity credit market is at a critical early stage, low-integrity credits could rapidly undermine the market confidence before it gains momentum and, more importantly, risk further irreplaceable habitat loss."
We cannot afford to repeat the trial-and-error approach - the hard lessons learned from the carbon market make this clear. The stakes are too high for anything less than rigorous standards from the outset.
The paper stresses the need for systemic transparency and regulatory oversight, warning that poorly enforced regulation undermines credibility.
